For Vera Bradley, Cowen Says Q4 Could Be The Moment Of Truth

The brokerage noted that management believes the biggest catalyst to returning comps to positive territory is traffic growth. The traffic inflection could be a combination of both getting more customers back to the store, as well as acquiring new customers to the brand.

"While we acknowledge inherent risk w/retail turnarounds, & toughening compares in 2H, we believe VRA is set up well to deliver upon their comp expectation," analyst Oliver Chen wrote in a note.

Related Link: Vera Bradley Announces Licensing Deals With Lifeguard Press And Fox Chapel

Chen said the company is taking care to make sure they are continuing to stay true to their heritage and ensuring repositioning is more of a modernization of the brand versus a major departure. In addition, the company is being very prudent with sourcing and expense controls.

"We believe the business is stabilized given the recent sequential improvement in comps, and successful efforts of promotional pullbacks could benefit margins over the long-term," Chen said.

However, Chen maintains his Market Perform rating on the stock, stating that in the near term "we worry as many edits are necessary, including product and flow, elevation of online, substantial line extensions, department store presence, and direct channel volatility."

At time of writing, shares of Vera Bradley remained almost flat at $16.64. The analyst has a price target of $18.

Full ratings data available on Benzinga Pro.